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Equity Markets

U.S. stock futures were mixed early Thursday following the previous day's record session as earnings from heavyweights like Morgan Stanley and American Express grab the spotlight. On Bay Street, earnings from Canadian Pacific Railway are due after the close of trading. The Bank of Canada's rate hike continues to factor into the equation with the Canadian dollar trading down slightly in early going. Overnight, world shares held close to record levels, helped by solid economic numbers out of China.

Figures released early Thursday showed China's economy grew at an annual rate of 6.8 per cent in the fourth quarter while December industrial output grew by 6.2 per cent.

"Slightly better than expected data (employment in Australia and GDP in China) maintain the theme of synchronised global expansion," Societe Generale's Kit Juckes  said in a morning note. "Add that to the Apple's commitment to spend a hunk of repatriated cash in the U.S. and there reasons to be cheerful."

In Canada, economic reports for the day are limited the December ADP employment report. That report follows the Bank of Canada's decision on Wednesday to hike interest rates by a quarter percentage point, marking the third increase in six months. The bank cited a strong recent economic performance but also flagged concerns about uncertainty surrounding NAFTA.

Still, Bank of America said in a report that it expects the central bank to hike twice more this year - in April and July.

"We see upside risks to our call given strong growth in the US and the possibility of four hikes this year by the Fed. The BoC needs to remain vigilant about several downside risks, but those risks should not prevent the BoC from hiking," Bank of America said. "NAFTA uncertainty should not have an impact on monetary policy unless the risk of a breakdown materializes. Highly indebted households are a reason to pace the hikes, but not to remain on hold, in our view."

On the corporate side, TransCanada shares could see some movement after Alberta said it would make a two-decade commitment to the company's Keystone XL pipeline. The Globe's Kelly Cryderman and Jeff Lewis report that Alberta's Crown corporation, the Alberta Petroleum Marketing Commission, will pledge 50,000 barrels of oil a day for 20 years. TransCanada rival said the agreement amounts to a "subsidy" for the project.

On Wall Street, Morgan Stanley said quarterly profit fell 58.8 per cent on a one-time hit of about $1.2-billion related to the U.S. tax code overhaul. Net income fell to $686-million or 29 cents in the fourth quarter, from $1.67-billion or 81 cents a year earlier. Excluding one time items, the bank topped forecasts with adjusted earnings per share of 84 cents, compared with analysts' forecasts of 77 cents. Shares were up 1.2 per cent in premarket trading.

Overseas, European markets edged higher following Wall Street's rally on Wednesday. The pan-European Stoxx 600 was up with most sectors higher in morning trading. Britain's FTSE 100 slid 0.40 per cent. France's CAC 40  was up 0.15 per cent and Germany's DAX rose 0.36 per cent.

In Asia, markets finished mixed. Japan's Nikkei finished down 0.44 per cent. Early in the session, that index hit a new 26-year high but then turned lower as the close approached with financials finishing in the red. Hong Kong's Hang Seng rose 0.43 per cent and the Shanghai composite index rose 0.91 per cent.

Commodities

Crude prices were steady early on with Brent holding above $69 helped by declining U.S. inventories and concerns over threats of an attack on Nigeria's petroleum industry.

The day range on Brent so far is $69.11 (U.S.) to $69.63. Earlier in the week, Brent topped $70 for its best showing since December 2014. West Texas Intermediate had a day range of $63.85 to $64.35.

On Wednesday, the American Petroleum Institute showed lower crude stocks although gasoline and diesel inventories rose last week. U.S. government figures from the Energy Information Administration are due for release after the start of trading on Thursday. Earlier this week, the EIA said it expects U.S. oil output to continue to rise next month with shale production climbing by 111,000 barrels a day.

"The upside is now limited for oil prices," Fawad Razaqzada, market analyst at brokerage Forex.com, told Reuters. "U.S. oil producers will ramp up production in the coming months."

Also playing a role Thursday are reports that militant group Niger Delta Avengers have threatened an attack on Nigeria's oil sector in coming days. Nigeria is Africa's biggest oil exporter.

In other commodities, gold edged higher after touching its lowest level in a week as the U.S. dollar lost some recent altitude. Spot gold was trading higher while U.S. gold futures for February delivery were in negative territory.

"Gold continues to trade in lock-step with the U.S. dollar," said Carsten Menke, analyst at Julius Baer in Zurich.

"We think the dollar has fallen too much. We see more upside for the dollar heading into the second quarter so that means that gold should move back below $1,300 and towards $1,250 by mid-year."

Silver prices were higher early on. London copper prices were higher after losses in the previous session.

Currencies and bonds

The Canadian dollar was trading down slightly early on following a wild ride during the previous session after the Bank of Canada raised interest rates but signalled some concern over NAFTA. The day range on the loonie so far is 80.21 cents (U.S.) to 80.45 cents.

On Wednesday, the Bank of Canada raised interest rates for the third time in six months but also said NAFTA uncertainty is weighing on the outlook. That initially sent the loonie into a tailspin although the currency recovered much of those loses as trading continued.

"Thanks to a softer greenback, the Canadian dollar has also steadied after initially shedding half a cent following the Bank of Canada's slightly dovish press statement that announced a widely expected rate hike," Bank of Montreal economist Sal Guatieri said in a morning note. "The statement and the Governor's balanced remarks largely support our view that a cautious, data-dependent Bank will delay the next rate increase until July, barring a continued run of stellar job reports."

He said, barring an unfavourable outcome in the NAFTA talks, BMO sees two more rate hikes this year.

In other currencies, the U.S. dollar edged up after touching a three-year low on Wednesday. The U.S. dollar index was up modestly at last check although off early morning peaks. The index weighs the greenback against a basket of world currencies. Meanwhile, yields on two-year U.S. Treasuries climbed to 2.06 per cent their highest levels since 2008 while 10-year Treasury yields hit 2.60 per cent, their highest levels last year.

The euro was higher on the session but below Wednesday's peak of $1.2323 (U.S.). That was its highest level against the U.S. dollar since late 2014.

Stocks set to see action

The Alberta government is making a two-decade commitment to TransCanada Corp.'s long-stalled Keystone XL pipeline – a key move that will underpin the $8 billion (U.S.) project that has struggled to gain enough support from major oil shippers, The Globe's Kelly Cryderman and Jeff Lewis report. The Alberta government's crown corporation, the Alberta Petroleum Marketing Commission, will pledge 50,000 barrels of oil per day for 20 years, said Cheryl Oates, communications director for Alberta Premier Rachel Notley.

Amazon.com Inc. has released its short list of 20 candidates for its second headquarters in North America. The list's only Canadian city is Toronto.

Morgan Stanley reported a 58.8-per-cent slide in quarterly profit on Thursday, as the bank took a one-time provision of about $1.2-billion for the new U.S. tax law. Net income fell to $686-million or 29 cents per share in the fourth quarter ended Dec. 31, from $1.67-billion or 81 cents per share, last year. Excluding the one-off charge and other items, Morgan Stanley's adjusted profit was $1.68 billion, or 84 cents per share. Analysts on average were looking for 77 cents per share, according to Thomson Reuters I/B/E/S.

Bank of New York Mellon Corp. reported a 37-per-cent rise in fourth-quarter profit on Thursday, benefiting from a one-time gain of $427-million from the federal tax overhaul. BNY Mellon, the world's largest custodian bank, said net income applicable to common shareholders rose to $1.13-billion, or $1.08 per share, in the quarter ended Dec. 31, from $822-million, or 77 cents per share, a year earlier. Analysts on average had expected earnings of 91 cents per share, according to Thomson Reuters I/B/E/S.

European plane maker Airbus on Thursday announced an order with Emirates worth $16-billion for Airbus' flagship A380 superjumbo, in a deal which looks set to protect the future of the A380 program. It said Emirates has made a commitment for 20 A380s along with an option for 16 more with deliveries to start in 2020, valued at $16-billion at latest list prices. Airbus shares were higher on the news.

Wyndham Worldwide Corp. will buy La Quinta Holdings Inc.'s hotel operations for $1.95-billion, it said on Thursday, adding another well-known U.S. brand and nearly 900 mid-scale, upper mid-scale and economy locations to its portfolio. Wyndham Hotel Group, known for its own-brand hotels as well as Ramada, Days Inn and Super 8 budget lodgings, will now have a total of 21 brands when the La Quinta deal closes in the second quarter of 2018. Shares of La Quinta rose 8.4 per cent on the news while those of Wyndham rose 2.5 per cent in premarket trade.

Alcoa Corp. said late Wednesday that its fourth-quarter loss widened to $196-million as it continued working to streamline operations. The Pittsburgh-based company said it had a loss of $1.06 per share. That compares with a loss of $125-million, or 68 cents per share, at the end of 2016. Alcoa said it would have earned $1.04 per share without accounting charges for restructuring. The results fell short of the $1.23 per share that the six analysts surveyed by Zacks Investment Research expected. Its shares fell 6.6 per cent in premarket trading.

More reading: Thursday's small-cap stocks to watch
More reading: Thursday's Insider Report

Economic News

Payroll company ADP said private hiring in Canada fell by 7,100 positions in December.

U.S. housing starts decreased 8.2 per cent to a seasonally adjusted annual rate of 1.192 million units, the U.S. Commerce Department said.

Initial claims for U.S. state unemployment benefits dropped 41,000 to a seasonally adjusted 220,000 for the week ended Jan. 13, the lowest level since February 1973, the Labor Department said.

(11 a.m. ET) EIA Petroleum Status Report is released.

With files from Reuters and Bloomberg

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